If you look at Dogecoin (DOGE) charts from the perspective of a financial chartist, you will notice an alarming presence of a classic bearish structure.
For example, the pseudonymous analyst Tyler Durden highlighted what appears to be a “head-and-shoulders” pattern. The trading structure forms when an asset makes three peaks at the same support level. Its middle peak is higher than the other two.
Durden flashed the head-and-shoulders-like pattern to predict a 67% price drop in the Dogecoin market.
The analyst called it “programmed” and indicated the tendency of the pattern to crash assets once it falls below $ 0.299, the support level.
Typically, in such a case, the downward target is the height of the pattern. In the case of Dogecoin, the maximum length between the top and support levels of the head-and-shoulder pattern was $ 0.197.
This shifts the downside target of the head-and-shoulder pattern lurking near $ 0.05, as Durden pointed out.
“Even Elon [Musk] can’t save that with his tweets. He tried and every time he just made another lower high, “he said.” 0.05 is programmed.
In detail, the DOGE / USD exchange rate corrected a little more than 60% after peaking at $ 0.76 on May 8th. The spike to the $ 0.76 spike itself was part of a 16,462% price explosion measured from early 2021.
Meanwhile, Dogecoin net return was 67,757.14% from its pandemic-induced low in March 2020 of $ 0.00112 to $ 0.76. The enormous upward trend made the so-called joke cryptocurrency the most powerful financial asset in the world and even surpassed the combined returns of Bitcoin (BTC), S&P 500, Nasdaq Composite and gold.
What worked as a bullish catalyst for Dogecoin were nothing more than tweets from Elon Musk, a billionaire entrepreneur who sent out various supportive messages in favor of the cryptocurrency during its multi-thousand percent price rally.
Your welcome pic.twitter.com/e2KF57KLxb
– Elon Musk, the 2nd (@elonmusk) February 4th, 2021
On April 28, the CEO of Tesla declared himself a “Dogefather” and increased Dogecoin prices by 18% on the same day. Previously, Musk’s decision to partner with Dogecoin developers to improve transaction efficiency resulted in a 25.25% intraday price jump on May 13th.
But the frenzied pump, led by Musk, barely gave Dogecoin the opportunity to establish sustainable price floors.
As an exception, DOGE / USD held the $ 0.040 to $ 0.047 range in February-March 2021 after correcting down more than 50% from its then all-time high of $ 0.1. After eight weeks of holding the range for support, the pair continued its upward rally, eventually reaching $ 0.76.
Therefore, before reaching Durden’s target price of $ 0.01, Dogecoin expects to find buyers in the $ 0.040-0.047 range due to its brief but historical significance as a support area.
Relatives: Has the doge had its day? Dogecoin interest is cooling
Meanwhile, DOGE / USD also maintains preliminary support confluence defined by the USD 0.25-0.27 area and the 20-week exponential moving average (20-day EMA; the green wave in the graph above) .
Meanwhile, The Asian Investor, a pseudonymous analyst, doesn’t expect tech levels to stop Dogecoin from plummeting any further. In his Seeking Alpha article published earlier this month, the pseudonymous analyst referred to Dogecoin as a pump-and-dump token, adding that the cryptocurrency would eventually crash to zero. Excerpts:
“With new pump-and-dump” opportunities “popping up every other day, it is not very attractive to invest [in] an “asset” that has already risen so much. Expect Dogecoin to fall towards $ 0 this year and die a slow death. “